State aid to co-finance the jobs


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Learning Outcomes

Objectives and goalsClick to read  

At the end of this module you will be able to:

Know about government crisis support mechanisms
Identify the anti-crisis Instruments suitable for your enterprise
Succesfully use anti-crisis instruments
 

STATE AID TO CO-FINANCE THE JOBS

What is State-aidClick to read  

State aid is aid granted by the state or from state sources, which infringes or threatens to distort competition by favoring certain enterprises or the production of certain products.

State aid may be granted in particular in the form of:
• subsidies and tax credits;
• capital and investment subsidies;
• the so-called "Soft lending" (preferential and conditionally redeemable loans, deferral and payment in installments);
• sureties and guarantees.

The entities granting aid should be understood as public administration bodies and other entities that are authorized to provide aid, including a public entrepreneur. Assistance is most often provided as a result of making a decision or signing a contract.

Source: https://www.sejm.gov.pl/sejm8.nsf/BASLeksykon.xsp?id=6C69A9C632BBC917C1257A59003DD1CF&litera=P

Attention:
In light of the improvement in the sanitary crisis in Europe and the gradual lifting of the related restrictive measures, the European Commission, in line with its declaration of 12 May 2022, did not extend the validity of  Temporary Framework beyond the current date of application, i.e. 30 June 2022.

Information on all aid programs notified to the European Commission, EC decisions approving aid, legal acts and explanations related to public aid granted to entrepreneurs who have suffered as a result of COVID-19 can be found here:

https://ec.europa.eu/competition-policy/state-aid/coronavirus_en

USING ANTI-CRISIS INSTRUMENTS Click to read  

 

State subsidies are only obtainable if you know:

 

THE CONCEPT OF AN ENTERPRISEClick to read  

Can you determine the status of your company?

Do you know the status of your company?
Are you SME or microenterprise?
Correct determination of the amount of co-financing (based on the SME status of the enterprise) is an important formal condition and has an impact on the possibility of receiving a subsidy.

 

The concept of an enterprise

The well-established jurisprudence of the CJEU shows that for the purposes of EU competition rules  an enterprise is any entity that carries out an economic activity independently its legal form and method of financing and that all entities that are controlled (legally or de facto) by the same entity should be treated as a single enterprise. 

Source: https://ec.europa.eu/competition/state_aid/what_is_new/maritime_transport_overview_sa_rules_during_coronavirus.pdf

THE SIZE OF THE ENTERPRISEClick to read  

The size of the enterprise is influenced not only by the number of employees, but also by the annual turnover or the annual balance sheet of the enterprise as well as links with other entities (personal, capital, organizational, economic).

Source: https://ec.europa.eu/competition/state_aid/what_is_new/maritime_transport_overview_sa_rules_during_coronavirus.pdf

CUMULATION OF AIDClick to read  

Before submitting an application for state aid, the entrepreneur should get acquainted with the general rules of aid accumulation, because the Temporary Framework  defines its maximum values ​​that can be used by an enterprise within individual sections (types of aid).

Source: https://ec.europa.eu/competition/state_aid/what_is_new/maritime_transport_overview_sa_rules_during_coronavirus.pdf

 

HOW DO I GET STATE AID ?Click to read  
THE CONDITIONSClick to read  

The conditions that must be met in order to benefit from the support differ depending on the country - the basic premise is, however usually the need to suspend activities or reduce it to a significant extent (which is usually measured by a decrease in turnover by specified percentage). The design of subsidy programs varies in some countries the programs are rather of a horizontal nature and many governments offer subsidy support dedicated to entities from selected sectors. 

Source: Nicolaides, P. (2020a). Application of Article 107(2)(b) TFUE to Covid-19 Measures: State Aid to Make Good the Damage Caused by an Exceptional Occurance. Journal of European Competition Law & Practise, 11(5–6). http://doi.org/10.1093/jeclap/lpaa026

 

FINAL STAGEClick to read  

What is the nature of the chosen supporting mechanism? Is in refundable or non-refundable?
Is there any final report required? What must be shown in the report?
Was there any information obligation?

 

ANTI-CRISIS SHIELDSClick to read  
ANTI-CRISIS SHIELDS SOLUTIONSClick to read  
SOLUTIONS IN THE FIELD OF TAX POLICYClick to read  

In order to counteract the effects of COVID-19, a very wide range of solutions in the field of tax policy was applied. For example, we can indicate:

► temporary exemptions from the obligation to settle certain tax liabilities, by lowering tax rates;
► shifting all possible maturities of liabilities;
► accelerating the refund of overpaid taxes; flexibility - many countries have offered
► tax payers a wide freedom to choose the method and time of settlement

LABOR MARKET SUPPORT INSTRUMENTS Click to read  

Labor market support instruments that help to sustain employment or subsidize wages. Solutions whereby governments finance part of people's salaries are popular part-time workers or compensate for the employee costs incurred in connection with the layoffs medical (e.g. Italy). Some countries rely on pre-existing programs in this regard (Spain expanded the ERTE program, Italy relies on the Cassa Integrazione fund). Such aid measures generally support directly entrepreneurs, but their final beneficiaries are, of course, employees. The state usually only compensates part of it remuneration for a specified period and up to a specified amount.

Equally popular are solutions consisting in exemptions from the obligation to pay advances for income tax and social security contributions, sometimes they take the form of deferring the maturity of tax liabilities or lowering the applicable rates. Solutions of this type have been used by, among others Spain, Italy. Various types of subsidies for working parents who have to close their schools are also popular arrange care for their children.

Source: https://www.bgk.pl/files/public/Pliki/Analizy_ekonomiczne/raport_BGK_narzedzia_pomocowe_COVID_styczen2021.pdf

 

ANTI-CRISIS SOLUTIONS Click to read  
MAINTENANCE OF JOBS Click to read  
EVALUATION OF THE SUPPORT MECHANISMS Click to read  
Conclusions

Key takeawaysClick to read  

The anti-crisis shields covered changes from various areas of the economic system
The anti-crisis shields included direct state-aid as well as a number of indirect solutions (e.g. tax reliefs)
The anti-crisis shields included detailed changes in various areas of the law
The anti-crisis shields were subject to frequent changes and required adaptation to the rapidly changing reality



Description:

The Polish legislator introduced special support instruments in connection with the spread of the SARS-CoV2 virus. The first four anti-crisis shields were adressed to all employers, the following anti-crisis shields were adressed to employers of most vulnarable sectors, especially touristic sector, culture institutions, gastronomy etc. There were also some special simplier instruments for MSME.


Keywords

State aid, Anti-crisis Shields, Reliefs for MSMEs


Bibliography

Coronavirus (COVID-19): SME Policy Responses, OECD, updated 15 July 2020
OECD SME and Entrepreneurship Outlook 2021
 Dębkowska, K., Kłosiewicz-Górecka, U., Szymańska, A., Ważniewski, P., Zybertowicz, K. (2021), Tarcza Antykryzysowa... Koło ratunkowe dla firm i gospodarki?, Gniazdowski, M., Kubisiak, A., Kutwa, K., Rybacki, J. (współpr.), Polski Instytut Ekonomiczny, Warszawa
Buendia, J.L. i Dovalo, A. (2020). State Aid Versus COVID-19. The Commission Adopts a Temporary Framework. European State Aid Law Quarterly, 19(1).
Nicolaides, P. (2020a). Application of Article 107(2)(b) TFUE to Covid-19 Measures: State Aid to Make Good the Damage Caused by an Exceptional Occurance. Journal of European Competition Law & Practise, 11(5–6). http://doi.org/10.1093/jeclap/lpaa026
http://doi.org/10.1093/jeclap/lpaa026.